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By Hilton Tarrant

Moneyweb: Columnist

City of Joburg quietly reverses new prepaid electricity surcharge

The implementation of the surcharge, which has since disappeared, caught many by surprise, as it was not included in the draft budget book or City Power's tariffs document.

The City of Joburg has quietly reversed a R200 per month municipal surcharge for prepaid electricity customers that came into effect on July 1. The surcharge was to have been added to municipal rates bills this month, meaning that residential users would not see what is effectively a substantial increase in the cost of electricity until the end of the month.

The schedule of approved tariffs for 2019/2020 on City Power’s website still contains the details of the surcharge as of Monday morning.

However, a different, summarised schedule of tariffs on the city’s website (labelled “Draft Tariff Reports”) contains no mention of the surcharge. This schedule, on which the surcharge no longer appears, is said to have been approved by the municipality on Friday. This, despite the fact that new tariffs kicked in on Monday.

The updated tariff document, which has been made available in PDF format on the city’s website, was created on Friday.

It is not clear whether or not the surcharge formed part of the tariffs approved by the National Energy Regulator of South Africa (Nersa), which has not yet published its approved municipal tariffs for the new financial year (from July 1).

The implementation of this municipal surcharge caught many by surprise, as it was not included in the draft budget book or City Power’s tariffs document, both of which were tabled in March.

In his note to residents, Ward 117 councillor Tim Truluck states that the surcharge then “appeared in the 2019/20 budget book that was tabled for the budget in late May. It appears nobody noticed them then and they were passed by council”.

He adds that he is not certain whether these changes were “tabled at the Environment and Infrastructure Services (EISD) Section 79 Oversight Committee”. He notes that he sits on the committee and was unaware of the changes.

“I have asked the chair of this committee to investigate these increases. I have also asked the MMCs of EISD and Finance to look into how these charges were implemented without any public or prior consultation.”

While residents who use prepaid electricity will breathe a sigh of relief, it is not clear how City Power is going to meet its objective of better aligning the residential prepaid tariff to the residential conventional tariff. Those credit users who are on the conventional (‘normal’) tariff already pay two fixed monthly charges: a service charge and a capacity charge. From July 1, this ranges between R631.17 and R805.41 per month (including VAT), depending on supply and phase usage.

Without the municipal surcharge, residential prepaid users still face fairly steep increases in tariffs given the introduction of new tiers in City Power’s tariff structure. Those users who consume more than 350 kilowatt hours in a month will see a significant jump in pricing (previously, consumption of up to 500kWh a month was at the same tariff).

Any consumption above 500kWh is also subject to a network surcharge of 6c/kWh.

Hilton Tarrant works at YFM. He can still be contacted at hilton@moneyweb.co.za

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